The Last 30 Days

June 22, 2006

The Last 30 Days

Three months ago we documented how median house prices in Silicon Valley make most of their annual increases from February to April. We showed how, over the last three years, the six-months starting July showed median price changes of 0% ($0, 2003), +1.6% ($11K. 2004) and -0.9% (-$6K, 2005).

It's now 90 days later, so how are prices doing?

Re-creating "The Next 60 days'" table, using the local paper's figures for "Total Resale Homes":

Median +/-$ 2003 2004 2005 2006
January -$4K -$47K -0- +$1K

February     +$7K   +$52K   +$22K   +$17K
March        -$10K   +$39K   +$33K   +$12K
April        +$15K   +$11K   +$17K   -$10K
May          -$4K   +$15K    +$8K   +$27K   YTD= +$47K
June         +$29K    +$9K   +$15K
July         -$24K -$9K    -$5K
August       +$17K   -0-    +$14K
September    -$3K    +$5K    -$9K
October      +$10K +$5K    +$9K
November     -0- -0-     +$1K
December       -0-   +$10K   -$15K
Total        +$43K +$90K   +$90K

Comparing YTD numbers for the last four years, we find

YTD +/-$ 2003 2004 2005 2006
thru May +$4K +$70K +$80K +$47K

Positive numbers all around, although 2006 is distinctly weaker, so far, than 2004 or 2005. Looks like June will be a key month, given it was solidly positive in all three prior years.

Building on an item we mentioned last month, let's peek at YTD volume over the last few years.

Resales Sold 2003 2004 2005 2006
May 1,662 2,149 1,903 1,421

YTD 7,255 9,267 8,174 6,410

Today's realtor blurb admits y-o-y volume is down but never mentions a percentage (-25.3%).

The monthly realtors' blurb only compares current volume to last month and last year. To make thinks a little more interesting, let's invent a "new" statistic "year-over-two-years-ago" or "y-o-2y":

Resale Units 2003 2004 2005 2006 y-o-y y-o-2y

May 1,662 2,149 1,903 1,421 -25.3% -33.9%

YTD 7,255 9,267 8,174 6,410 -21.6% -30.8%

We don't have complete data but let's also look at total listings:

2006:

January 12 1,687

February 9 1,818

March 9 2,103

April 9 2,194

May 7 2,606

June 8 2,974

According to our records, Santa Clara County last had 3,000 listings ~August, 2003, which was down from nearly 3,500 in July, 2003. Could we be heading for 3,500 again? In the next two months?

Breaking down the details:

2005 Peak Since Since

All Homes Current Peak Date Peak y-o-y Jul.01

Santa Clara Co. $690K $670K May 26 xxxx 7.0% 5.8%

San Mateo Co.* $760K $775K Aug.19 -1.9% 3.4% 0.7%

Santa Cruz Co.**$735K $720K May 26 xxxx 8.3% 3.5%

Resale Homes

Santa Clara Co. $755K $725K May 26 xxxx 9.4% 7.7%

San Mateo Co.* $816K $830K Aug.19 -1.7% 2.0% 0.2%

Santa Cruz Co.**$757K $775K Nov.04 -3.4% 5.7% -1.0%

*= thru May 23

**= thru May 26

San Mateo and Santa Cruz numbers are much more volatile than Santa Clara County. They bounce, up and down, on lower volume, more than Santa Clara County on a regular basis.

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April also clearly showed continued weakness in y-o-y gains:

May Apr Mar Feb Jan

All Homes Current Gain Gain Gain Gain Gain

Santa Clara Co. $690K $15K $0K $3K $19K -$5K

San Mateo Co. $760K $11K -$1K $37K $15K -$20K

Santa Cruz Co. $735K $36K $14K $5K -$20K -$10K

Or just focusing on the y-o-y:

May Apr Mar Feb Jan end-Dec

All Homes Current y-o-y y-o-y y-o-y y-o-y y-o-y y-o-y

Santa Clara Co.$690K 7.0% 6.3% 10.2% 14.2% 15.5% 14.8%

San Mateo Co. $760K 3.4% -0.1% 3.4% 6.4% 8.2% 12.5%

Santa Cruz Co. $735K 8.3% 11.5% 8.0% 12.6% 13.5% 17.4%

Running the same numbers for Resale Homes:

May Apr Mar Feb Jan

Resales Homes Current Gain Gain Gain Gain Gain

Santa Clara Co. $755K $27K -$15K $7K $17K $0K

San Mateo Co. $816K $11K -$5K $25K $13K -$17K

Santa Cruz Co. $757K $8K $24K -$7K -$12K $9K

Again focusing on just y-o-y:

May Apr Mar Feb Jan end-Dec

Resale Homes Current y-o-y y-o-y y-o-y y-o-y y-o-y y-o-y

Santa Clara Co. $755K 9.4% 5.1% 10.6% 13.0% 13.6% 16.5%

San Mateo Co. $816K 2.0% 2.5% 3.8% 5.7% 10.8% 10.7%

Santa Cruz Co. $757K 5.7% 10.8% 3.8% -0.3% 4.7% 10.9%

Even though prices popped a little in May, volume declined m-o-m, y-o-y and y-o-2y. The apparent presence of flippers (maybe they're dolphins, since they expect to survive for extended periods of time underwater: http://www.viewfromsiliconvalley.com/id232.html) may still be holding these numbers up a bit.

Total listings continue to increase and are rapidly approaching 2003 levels.

Headlines are starting to admit there may be some weakness in local housing. Instead of another 10% in 2006, they think we will be flat, or maybe down 2%. Instead if being trumpeted as a break in the real estate industry's perpetual pie-in-sky code of honor, the bulls are using it to "prove" we're about to get a soft landing. Hmmm...

Bottom line:

We'd still rather be renting than buying in this market!

Coming up:

"Always and "inexorable"?

"Total median dollar volume" (Another "new" statistic.)

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The above is not intended as advice to buy, sell or hold any stock, bond, real estate nor any other financial product or service. Invest at your own risk.